STEP 2: Identify risk

STEP 2 of the implementation road map draws attention to the importance of conducting due diligence through the freedom of association (FOA), collective bargaining (CB) and worker representation lens. FOA as the enabling right and the key to unlocking other international labour standards, needs particular attention when identifying risk to workers at a country level.

The ETI approach to due diligence and the associated technical background is contained in the ETI due diligence infographic and guidance document. The purpose of this resource is to help companies implement ETI Base Code clause two and includes:

Freedom of Association, the right to form trade unions and collectively bargain, receives much less exposure and faces active opposition than other rights. Responsible business, through their commitment to human rights at work, recognise the absence of FOA, CB and worker representation is a salient risk to workers in their supply chains and affects the workplace in numerous ways.

Freedom of Association is part of the Universal Declaration of Human Rights providing for the right of freedom of assembly, association, trade union membership.  This right applies to all workers, irrespective of race, religion, gender, occupation, nationality or political opinion. It is central to the ILO Declaration on Fundamental Principles and Rights at Work at work.

Trade union membership or independently elected worker representatives are the measure of how freely workers can express and contribute to their industry or workplace through formal structures such as collective bargaining. They do however need to be in workplaces without fear of intimidation, harassment or reprisals.

Address and resolve workplace human rights impacts

Businesses should avoid infringing the human rights of workers in their supply chains and should act to help address and resolve any adverse human rights impacts unintentionally caused by their activities or through their business relationships. This obligation exists irrespective of the state’s ability and/or willingness to fulfil its human rights obligations.

Furthermore, within due diligence mapping, freedom of association is a critical factor in assessing risk to workers, particularly in sourcing countries where the ability for workers to voice their concerns is suppressed and the legal framework, underpinning protection of worker rights, is weak or unenforced.

As a business sourcing product from the global marketplace, committing to meeting, promoting and supporting the right to freedom of association within your supply chains is part of being a responsible business.

In some sourcing countries, the company’s’ responsibility may exceed what is required by national legislation. A conflict with domestic law does not limit action where the UN’s Guiding Principles on Business and Human Rights (UNGPs) provide for more robust protections. However, a conflict does occur when following the UNGPs would be illegal under domestic law. In sourcing countries where domestic laws and regulations conflict with the UNGPs, businesses should seek to honour similar principles and standards to the fullest extent possible, without violating domestic law, in order to respect or exceed the ETI Base Code standards.

The UNGPs state that businesses should “avoid causing or contributing to adverse human rights impacts through their own activities and address such impacts where they occur” and to “seek to prevent or mitigate adverse human rights impacts that are directly linked to their operations, products or services by their business relationships, even if they have not contributed to those impacts.”

• “Cause”: A company may cause an adverse impact – an infringement of workers’ fundamental human rights in the workplace – through its operations, products or services, or by failing to address human rights within its supply chains.
• “Contribute”: A company may contribute to an adverse impact if it has unintentionally caused, facilitated or incentivised an entity (such as a supplier) to create that impact.
• “Directly linked”: A company may be linked to the human rights infringement through its business relationships (e.g. with subsidiaries, suppliers or partners).

The centre of the ETI Base Code

Freedom of association is integral to the ETI Base Code, enabling social dialogue, collective bargaining and other legitimate worker representation mechanisms. It encompasses raising awareness of workers’ rights, opportunities for workers to voice their concerns in the workplace, and the way in which disputes and grievances are handled on site.

Furthermore, when FOA and CB are in place this offers an effective way to identify and address other workers rights such as bonded labour, safe working environments and equality for example.

Companies usually understand ‘risk’ as referring to commercial risks to the enterprise – financial, operational and reputational. However, human rights risks are equally as important, and all due diligence procedures should identify and address risks to workers. The rights to freely associate and bargain collectively are framed under the International Labour Organization’s (ILO) core labour standards and conventions, and enshrined under its Fundamental Principles and Rights at Work. They also form the basis of ETI’s Base Code clause two. However, while FOA remains the key enabling right to delivering other critical workplace rights, it is often the most challenging to implement internationally, according to the ITUC Global Rights Index and the International Journal of Labour Research.

Counting the cost of freedom - global rights index

Published annually, the ITUC’s Global Rights Index is an interactive index of core labour standard violations. The report ranks countries against 97 internationally recognised indicators to assess where workers’ rights are protected in law and in practice. It draws on reports from trade unions around the world to build a picture of how workers are treated. Countries are graded based on the extent to which workers have access to fundamental rights, including civil liberties. Overall, human rights abuses in the workplace remain an engrained and systemic issue globally, despite the efforts of many parties, including companies, to address this pressing issue.

The 2015 International Journal of Labour Research, which focused on decent work in supply chains, identifies three categories of countries at risk: repressive regimes, state-controlled or monopoly trade unions and politically unstable countries. 

Across all country assessments, there may also be designated Export Processing Zones (EPZs).

Red flags for country assessments

Companies should investigate their own and their suppliers’ operations to ensure that nothing they do – or fail to do – prevents or inhibits workers from accessing their core labour right of freely forming or joining trade unions, or from engaging in collective bargaining.

The legal and institutional framework of a country is an important risk factor when assessing the likelihood and severity of impacts on workers’ human rights. In each sourcing country, businesses should identify the main trade union representing workers in the relevant sector, and assess:  

• The extent to which civil and political liberties are protected
• The legal and institutional framework for rights and the extent to which legal protections are enforced through inspectorates and judicial system.
• Obligation to join government-influenced unions
• Prohibitions on bargaining and industrial action in designated industries
• Differences in labour regulation between the national provision and export processing zone provision
• Government interference in trade unions – dissolution of unions without legal recourse, imposition of burdensome union registration procedures, limitations on the formation of national unions, prohibition of multiple unions within a single plant
• Exclusion of certain categories of workers from freedom of association, such as migrant, informal or other precarious workers
• Restrictions to unions’ legitimate political activities
• Lack of access to remedy for anti-union discrimination and dissuasive sanctions against employers
• Imprisonment, sanctions and violence against union leaders/members or retaliatory measures against striking workers without effective response by government
• Defects in government’s worker complaint processes, such as excessive delays or expense, light penalties, or non-punishment of offenders
• Lack of government action to combat labour-related corruption, for example, trafficking or bonded labour.

Red flags for individual suppliers (sub-contractors, processes, logistics and agents)

When approaching a new supplier, or establishing a new ethical supply chain policy, seek evidence of compliance with the law and with international operating requirements. The following questions, covered in detail in the ETI guidance on audit and non-compliance checklist[i], could guide either supplier self-assessment questionnaires or on-boarding questionnaires:

• Are there corresponding policy commitments reflecting adherence to core labour standards?
• What proportion of the workforce is unionised?
• What proportion of the workforce belong to worker representation groups?    
• Are worker representatives democratically elected by workers or selected by employers?
• Are there existing collective bargaining agreements (CBAs), including the name of the trade union?
• How do worker representatives contribute to the business?
• What worker engagement platforms are in place (or, how do workers express concerns)?
• Are workers involved in any factory/farm decision making?
• Has there been industrial action in the last 12 months – why?
• What is the workforce composition – for example, temporary, seasonal or migrant, gender mix?
• Which workers are members of the site trade union or worker committee – for example, gender mix, local and foreign migrants, contract workers, seasonal etc?
• Are pay, terms and conditions determined by a sector wage board or managers, and do they apply to all jobs regardless of the person employed?

Dealing with systematic abuse

Consider the extent to which risk to workers is systemic; this could be consistent denial of access to rights and related to the location of the site, industry type, or sub-sectors such as home working or illegal outsourcing. Consideration must be given to:

• The extent to which any negative impacts can be rectified (e.g. through compensation, reinstatement, etc.)
• Whether it is possible to restore the right in question to the affected workers
• The extent to which intimidation of workers for forming or joining a trade union effectively denies workers the right to representation.

It is also important to assess the relative urgency of workplace risks. We suggest assessing risks against three broad categories: violent repression, subversive control and alternate worker engagement, using a simple matrix to record your findings.

Developing an action plan

Once you have set priorities for promoting freedom of association and collective bargaining, mapped suppliers and identified supply chain risks, it is important to refine your basic risk assessment to establish a baseline for current operations. This will enable you to develop your action plan and measure improvement.

One of the most critical risks to address is the undermining of workers’ right to freely join trade unions or elect independent worker representatives, particularly where the law does not permit trade unions. This is because impact is widespread and can have profound consequences for enabling workers to access other fundamental rights.